Chapter Two: Types of Health Policies Flashcards
What is accidental bodily injury?
An unforeseen and unintended injury that resulted from an accident rather than a sickness.
What is cancellation?
Termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy.
What is comprehensive coverage?
Health insurance that provides coverage for most types of medical expenses
What is a deductible?
A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.
What is a lump sum?
A payout method that pays the beneficiary the entire benefit in one payment.
What does nonrenewal mean?
The termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy.
What are riders?
Riders are added to the basic insurance policy to add, modify or delete policy provisions.
What is the definition of sickness?
An illness, which first manifests itself while the policy is in force
What does it mean if something is tax exempt?
Not subject to taxation
What does it mean if something is taxable?
Subject to taxation
What is the definition of underwriting?
Risk selection and classification process
Basic hospital, Surgical and medical policies, and major medical policies are commonly grouped into what kind of insurance?
Medical expense insurance.
What are the three basic coverages under medical expense insurance?
Hospital
Surgical
Medical
What type of coverage is medical expense insurance?
First-dollar coverage
What is first-dollar coverage?
First-dollar coverage refers to the three types of basic coverage under medical expense insurance and they do not require the insured to pay a deductible.
How does major medical expense work?
The insurance company reimburses the medical service provider for any amount due
What does basic hospital expense coverage actually cover?
Hospital room and board
Miscellaneous hospital expenses
Are there deductibles for basic hospital expense coverage?
No.
Does basic hospital expense coverage have a limit for room and board?
Yes. Room and board are set at a specified dollar amount per day up to a maximum number of days.
Do miscellaneous hospital expenses have limits?
Yes, outlined in the policy.
What is another name for basic medical expense coverage?
Basic physicians’ nonsurgical expense coverage
Does basic medical expense coverage usually cover visits to patients in the hospital or office visits?
Hospital visits.
Are there deductibles with basic medical expense coverage?
No.
Can basic medical expense coverage be purchased to cover emergency accidents?
Yes
Can basic medical expense coverage be purchased to cover maternity events?
Yes
Can basic medical expense coverage be purchased to cover mental and nervous disorders? Hospice Care? Home health care? Outpatient care? Nurses’ expenses?
Yes
What are two major drawbacks of basic medical expense coverage?
These policies usually offer only limited benefits and are subject to time limitations.
Does basic surgical expense coverage have deductibles?
No.
What does basic surgical expense coverage cover?
Surgeons’ fees
Anesthesiologist
Operating room when not covered as miscellaneous medical item
What is a surgical schedule?
Within a contract the surgical schedule lists the types of operations covered and their assigned dollar amounts.
What is the relative value approach?
It is an approach that assigns a number of points that are relative to the number of points assigned to the maximum benefit.
What factor is multipled by the relative value to calculate the total amount paid by an insurance company for a surgical procedure under a basic surgical expense coverage?
The relative value (number assigned to a surgical procedure) is multiplied by the CONVERSION FACTOR
What is a conversion factor?
A number that represents the total amount the insurance company is willing to pay per point (relative value)
An insured person has a basic surgical expense coverage policy and they go in for an open-heart surgery. The relative value for the open-heart surgery is 2000 points and the conversion factor is 15. How much is the maximum benefit?
Maximum Benefit= relative value * conversion rate
2000 (relative value) * 15 (conversion rate)= 30,000
So the maximum benefit is $30,000
What is the big difference between basic medical expense policies and major medical expense policies?
Major medical expense policies offer a BROAD RANGE OF COVERAGE under one policy.
What kind of coverage does major medical expenses policies cover?
- Comprehensive coverage for hospital expenses (room and board and miscellaneous expenses, nursing services, and physicians’ services)
- Catastrophic medical expense protection
- Benefits for prolonged injury or illness
Do major medical policies have deductibles?
Yes
Which type of medical policies usually require coinsurance?
Major medical policies
What are two common types of major medical policies?
- Supplemental major medical policies
- comprehensive major medical policies
What kind of policy is used to help pay expenses that basic medical expense policies did not?
Supplemental major medical policies
If there are time limitations associated with basic medical expense policies, what additional policy can cover the expenses accrued?
Supplemental major medical policies
What is a corridor deductible?
The amount of money a policy owner must pay after the limits of the basic policy are exhausted and before the major medical coverage pays benefits.
What does HMO stand for?
Health maintenance organizations
How many employees must an employer have to be required to provide employees with an HMO?
More than 25 employees
What is the major goal of HMO Act?
To increase preventative care by offering free annual check-ups for the entire family and free or low-cost immunizations to members
How do HMO provide benefits?
They pay for services rather than reimbursements for services
How do HMO designate who is eligible for coverage?
HMO offers services to those living within a specific geographical boundaries.
Can HMO limit choice of provider?
Yes. They have a list of physicians you can see that meet their standards.
What are copayments?
A copayment is a specific part of the cost of care or a flat dollar amount that must be paid by the member.
Are deductibles usually associated with HMOs?
No.
HMOs operate on a captivated basis. What does this mean?
The HMO receives a flat amount each month attributed to each member whether the member sees a phsycian or not.
If someone has an HMO policy and they don’t see their PCP regularly, does the PCP still get paid?
Yes, the HMO will be regularly compensated for being responsible for the care of that member, whether care is provided or not.
What is necessary for a insured person with an HMO to see a specialty physician?
A referral from their PCP
Why may a PCP not want to refer a patient to a specialty physician when the patient has an HMO?
In many HMOs, there is a financial cost to the primary care physician for referring a patient to the more expensive specialist, thus the primary care physician may be inclined to use an alternative treatment before approving a referral.
What is the responsibility of a gatekeeper in an HMO?
To help control the cost of healthcare by only making the necessary necessary referrals.
Who plays the role of gatekeeper in an HMO?
The primary care physician
Do HMO provide inpatient hospital care out of the service area?
Yes.
What are some limits on HMOs in hospitals?
Treatment of mental, emotional, or nervous disorders, including alcohol or drug rehabilitation or treatment.
Will an HMO cover emergency care in an out-of-service area?
Yes, but they may make an effort o get the member back into the service area so that care can be provided by a salaried member physician.
Which type of health system pays physicians a fee for their services rather than a salary?
Preferred provider organizations (PPOs)
How do PPOs incentivize their consumers to pick a physician in network?
They will pay for a higher percentage of their services fees (90% for an in-network doctor vs 70% for an out-of-network doctor)
What is a PPO?
A group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced fee.
What two factors differentiate PPOs from HMOs?
PPOs do not provide care on a prepaid basis, but physicians are paid a fee for service.
Subscribers are not required to use physicians or facilities that have contracts with the PPO.
Can physicians and providers belong to multiple PPO groups?
Yes
In what kind of plan are employees free to choose a different plan every time a need arises for a medical services?
Point-of-service plan
True or False: PPO plans only allow consumers to see in-network doctors.
False. Members of a PPO plan are incentivized to see in-network providers because the plans are willing to pay a higher percentage for in-network providers, but a PPO plan member can see out-of-network providers.
Can members of POS plans see out-of-network providers?
Yes, but there may be member copays, coinsurance and deductibles that are substantially higher than in-network providers.
What are in-network providers called in a PPO?
Preferred
